The Social Security Administration is considering a significant modification to decrease the number of incorrect payments made to beneficiaries by exchanging payroll data from employers with the government. The SSA is currently experiencing issues with inaccurate earnings data, resulting in overpayments, which causes a financial burden for beneficiaries who are required to repay the agency.
To reduce the reliance on self-reporting from people who can access payment programs like Social Security Disability Insurance (SSDI) benefits and Supplemental Security Income (SSI) payments, the SSA seeks to establish secure information exchanges with businesses that handle payroll data.
The Payroll Information Exchange (PIE)
In a press release released on February 15, the SSA stated that the planned reform, known as Payroll Information Exchange (PIE), will help detect salaries that may go unreported and eliminate manual reporting errors. According to the agency, overpayments for SSDI and SSI recipients are frequently the result of unreported, late-reported, and improperly reported earnings.
By allowing Social Security to access your job and wage information through information exchanges while working for employers whose payroll data is available through the exchange, you reduce errors in manual reporting and lessen the reporting burden. The Payroll Information Exchange (PIE) also helps identify unreported salaries, resulting in correct payouts.
It is anticipated that this modification will greatly reduce mistaken payments, which will be favorable for both the SSA and recipients. In addition, the SSA will save money and strengthen program integrity while beneficiaries receive accurate benefits and are shielded from any repayment requests.
Individuals who currently receive SSDI and SSI benefits won’t have to modify the way they report their income and other personal information to the federal agency until further notice, as the proposed changes are still in the suggestion stage. The proposed amendments are open for public feedback until April 15th.
Each beneficiary’s situation is unique
By law, the Social Security Administration (SSA) must make adjustments to benefits or recover debts when it is discovered that an individual received payments that they were not entitled to, resulting in an overpayment. The SSA must fulfill its responsibility to taxpayers by ensuring that the trust funds are being properly managed.
The SSA claims that as every person’s circumstances are different, they handle overpayments on a case-by-case basis. Overpayments may arise from various causes, including but not limited to a beneficiary’s failure to immediately disclose employment or other changes that may impact their benefits.
However, the SSA highlighted that payment accuracy rates are still quite good, despite the staffing shortages and resource limitations that have made their service delivery more difficult.
Other changes coming to Social Security in 2024
More income will be taxed
The increase in maximum wages due to the Social Security payroll tax from $160,200 in 2023 to $168,600 in 2024 will mostly affect individuals earning high salaries. 6.2% of the 7.65% FICA tax that employees pay from their paychecks goes into Social Security. According to Social Security Administration data, roughly 6% of workers who pay Social Security taxes have annual incomes that are higher than the taxable maximum.
The maximum social security benefit will increase
As per CPA Practice Advisor, the highest Social Security payment for a worker who retires at full retirement age will increase from $3,627 in 2023 to $3,822 in 2024. This change will only affect individuals who apply for benefits at FRA, which is currently either 66 or 67 depending on their birth year. Those who apply early for benefits will receive a lower monthly payout.
Higher spousal and disability benefits
The Social Security Administration has announced that the average payments for widowed women with two children will increase from $3,540 in 2023 to $3,653 in 2024. Moreover, the average monthly payment for elderly widows and widowers living alone will also rise from $1,718 to $1,773. Lastly, the average monthly compensation for a disabled worker who has a spouse and one or more children will increase from $2,636 to $2,720.